It’s called the troika. It sounds like communism. It looks like communism. But is it true communism?
Wall Street Journal explains:
The Fed’s vice chair, along with the New York Fed president, is part of the inner circle of advisers—known as the troika—that shape the agenda for monetary-policy deliberations by the Fed’s rate-setting committee.
America’s Federal Reserve System operates with 12 branch locations across the country, employing roughly 20,000 people. Although often thought of as a clandestine organization, rich in both history and lore, at the heart of it, the Fed is nothing more than a bureaucratic organization. Like all bureaucracies, decision making has to be made somehow.
In the case of the Fed, the twelve member Federal Open Market Committee (FOMC) is the ultimate decision maker for monetary policy. But within the FOMC exists a troika, or the three most important central bankers in the country, if not the planet.
Here’s the opportunity to get to know them:
Chair Jerome H. Powell. By many accounts, Powell oversaw (or helped create) one of the worst economic periods in American history marked by high inflation, high unemployment, and government/Fed money creation programs in the trillions. I’ve dedicated countless articles quoting Powell, who often appears to show very little understanding of economics.
Despite a meager salary of $200,000 a year, the head of America’s central bank is estimated to have a net worth of $50 million.
Should congress approve of Biden’s picks, Lael Brainard will become the Fed’s Vice Chair and an extremely influential person in Washington. Last month she was mentioned when I asked whether the Fed needed more progressives on its payroll. Unlike Powell, Brainard is a learned economist, earning her MS and PhD from Harvard.
The third member of the troika, PhD holder from Stanford, is New York Fed President John C. Williams. Last but hardly least, his job title commands a permanent seat in the FOMC. Seldom seen in the media, and despite being unrecognizable to most Americans, the President of the New York Fed is probably more powerful than Powell himself. As explained, the:
New York Fed has several unique responsibilities, including conducting open market operations, intervening in foreign exchange markets, and storing monetary gold for foreign central banks, governments and international agencies. Foremost among its functions is the implementation of monetary policy, one of the three missions of the New York Fed. The other two are supervision and regulation, and international operations.
That explains how monetary policy is set; in a closed-door meeting, decisions such as how much money should be in the system, interest rate setting, and inflation guidance is deliberated. Within the select few stands the three members troika, as noted above, who have the most influence.
Is this communism per se?
One can easily get sidetracked into debates over whether a policy or practice is communism, socialism, fascism or any other kind of -ism. At the sake of getting sidetracked, what can be said is that the central bank is anti-capitalistic, embracing collectivism, not individualism.
If money creation was left to capitalism, where private individuals could own the means of producing money not constrained by banking regulation, currency laws, and deposit insurance, the country would look a lot different than now. There would be no bank bailouts, no government giveaway programs, and far less disparity between the rich and the poor. Who would pay for our wars, our prisons, the police state and vaccinations, our education system and student loan program? We can only guess. Since there is no Federal Reserve in a truly free market, who would be in a position to fund the system?